Motilal Oswal Hedges Tube Investment and Sees 25% Rise
It is the market leader in the manufacture of precision steel tubes in the engineering sector with a market share of approximately 60% in telescopic front fork suspension; it is a significant player in automotive door frames and the largest player in the fragmented industrial chain segment (35% market share) under the metal forming vertical. It is also the second player in the bicycle market.
The TI growth mode has three components – TI-1 (existing businesses), TI-2 (a venture capital-style model) and TI-3 (a private equity-style model based on acquisitions).
The Cycle business (~15% of revenue) is expected to post a CAGR of 10% driven by strong export growth, while the Other segment (~9% of revenue) is expected to post a CAGR of 22 % thanks to a ramp-up in the lens business and recovery in the industrial chain business.
As part of its TI-2 (VC model) strategy, TIINDIA is launching new platforms for future growth. It plans to invest at least INR 2 billion per year from its self-sustaining free cash flow to launch new businesses that will lay the foundation for future growth. TI-3 is based on the acquisition of stressed assets in existing lines of business or in new areas.